Credit Assessment: OAKHAM WEALTH MANAGEMENT LTD

1. Credit Opinion: CONDITIONAL

The recommendation is CONDITIONAL based on a marked recovery in the most recent financial year set against significant volatility in the preceding period. The company has demonstrated an ability to restore its balance sheet position, with net assets increasing 72% from £130,695 (2024) to £224,579 (2025), and cash improving dramatically from £13,788 to £105,990 over the same period. However, the near-cash exhaustion in 2023 (£1,177) and the inconsistency between net assets and shareholders' funds in 2023-2024 raise concerns about earnings stability and accounting treatment. A facility may be extended subject to enhanced covenants and monitoring.

2. Financial Strength

Balance Sheet Trajectory

Key Observations:

• Positive trajectory in latest year: Net assets have recovered to their highest level in the six-year period, surpassing the previous peak of £144,931 (2022).
• Shareholders' funds inconsistency: The negative shareholders' funds reported in 2023 (£-161,792) and 2024 (£-137,956) despite positive net assets is a significant anomaly. This likely reflects accumulated losses recorded in the P&L reserve that were subsequently offset — potentially through capital contributions, revaluation, or a prior-year adjustment in 2025. The reconciliation between these figures requires clarification from management.
• Capital base: Share capital has remained constant at £213,431, suggesting no new equity injections during the period. The 2025 recovery appears driven by retained profits rather than fresh capital.
• Gearing: With total liabilities of £184,633 against net assets of £224,579, the debt-to-equity ratio stands at approximately 0.82:1 — manageable, though the composition of those liabilities (trade creditors vs. debt) is not clear from the abbreviated data.

Concern: The swing from near-insolvency (cash of £1,177 in 2023) to a robust position in 2025 is substantial. Without full profit & loss detail, it is difficult to assess whether this reflects genuine trading improvement or one-off items (asset disposals, reclassifications, or exceptional income).

3. Cash Flow Assessment

Liquidity Position

The cash position has improved materially:

• 2023: £1,177 — critically low; effectively trading at the margin
• 2024: £13,788 — improved but still representing less than one month of operating costs (based on 2021 turnover of ~£532k, monthly costs likely £40-45k)
• 2025: £105,990 — a significant liquidity buffer, equivalent to approximately 2-3 months of estimated operating costs

Working Capital Assessment

Net current assets can be estimated by comparing current assets (predominantly cash plus debtors) against current liabilities:

• 2025 current assets appear healthy given the cash position
• The near-zero cash in 2023 suggests the company may have relied on creditor forbearance or director support during that period

Cash Flow Concerns:

1. Revenue visibility: Turnover is only disclosed for 2020 (£454,513) and 2021 (£532,638). No turnover data is available for 2022-2025, making it impossible to assess whether the 2025 recovery is revenue-driven or balance-sheet driven.
2. Cash conversion: The jump from £13,788 to £105,990 in cash within 12 months is substantial. If driven by debtor collection or asset realisation rather than trading income, sustainability is questionable.
3. Regulatory capital: As a financial intermediation firm (SIC 64999), the company may be subject to FCA capital adequacy requirements. The restored equity position should satisfy minimum thresholds, but this requires confirmation.

4. Monitoring Points

Additional Conditions for Facility:

1. Full accounts: Request full (unabbreviated) accounts for 2025, including P&L and cash flow statements, before drawdown
2. Explanation of 2023-2024 shareholders' funds: Obtain management explanation for the negative P&L reserve position and its reversal
3. FCA registration confirmation: Verify the company's regulatory status and any conditions attached to its permissions
4. Director's personal guarantee: Given the concentrated ownership structure, a personal guarantee from Mr Denley should be considered
5. Financial covenants: Include minimum net assets and cash covenants in the facility agreement

Business Resilience Notes:

• The company has traded for over 20 years (incorporated 2004), demonstrating longevity
• Two name changes (from S C Davies & Co to SCD & Co to Oakham Wealth Management) suggest a rebranding/evolution of the business model, most recently in 2017
• The sector (wealth management) is sensitive to market conditions and interest rate movements — economic downturns can rapidly compress fee income
• The single dominant shareholder provides decision-making efficiency but creates key-person dependency